How to Qualify for a Mortgage
There are a few things banks require to approve you for a mortgage...
Employment - Income is required to ensure you can make the payments. A full time permanent position with no probation period is required in most cases but if you have worked in a part time position for at least two years we can also use that income to qualify. Income that includes over time, commission, bonuses or self employed earnings must have a minimum 2 year history in order to qualify. Your income level will determine how much you can spend.
Good Credit - You must be able to show you can manage money. A credit check will show us your score which is determined by how well you manage and pay credit cards, loans, and lines of credit. If you have late payments, collections, or other bad debts this will significantly hurt your chances at being approved. The lenders like to see a minimum 2 year history of credit with good repayment history.
Down Payment - A down payment is very important when buying a home. If you have very good credit it is still possible to purchase a home with as little as 5% down payment. If you have poor credit a much larger down payment could be required (example: 20%). In most cases with good or average credit a minimum 5% down payment is needed and will allow you to qualify for best interest rates.
If you have solid employment, good credit, and a down payment, there is a good chance you will be approved for mortgage financing. The down payment can come from a number of sources including savings, investments, RRSP's (HBP), or even a gift from an immediate family member.